Published: Fri, September 13, 2019
Markets | By Otis Pena

OPEC Cuts 2020 Oil Demand Forecast

OPEC Cuts 2020 Oil Demand Forecast

In a monthly report, the Organization of the Petroleum Exporting Countries said oil demand worldwide would expand by 1.08 million barrels per day, 60,000 bpd less than previously estimated, and indicated the market would be in surplus.

Iraq, the second-biggest producer in OPEC behind Saudi Arabia, has said that it would cut its current production by 175,000 bpd by October, Reuters reported on Thursday after a monitoring panel of OPEC and its allies met in Abu Dhabi.

Brent crude futures rose 41 cents, or 0.7 per cent, to $61.22 by 0051 GMT, while US West Texas Intermediate (WTI) futures gained 40 cents, or 0.7 per cent, at $56.16.

He recalled that last November OPEC and other producers, headed by Russian Federation, agreed to cut production by 1.2 million bpd.

Investors were also keeping an eye on the upcoming weekly inventory report which is forecast to show USA crude supplies contracted by 2.9 million barrels. The surge in USA production and the politics of OPEC finances allowed America to move ahead of Saudi Arabia to become the world's largest oil exporter.

Trump is stirring up the oil market again as a move to delay the next tariff increase on China pushed prices higher after they tumbled on signs he's prepared to ease sanctions against major producer Iran. The swelling American output, as well as deepening concerns over global demand fuelled by a prolonged U.S.

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The US Energy Information Administration (EIA) also slashed its demand forecasts this week. Traders were looking for a 2.8-million barrel draw down. The authors wrote, "The challenge of market management remains a daunting one well into 2020".

As a result, Goldman Sachs lowered its forecast on 2019 oil demand growth to 1 million barrels per day (bpd), down 100,000 bpd, but left its 2020 demand growth estimate broadly unchanged at 1.4 million bpd.

Iran pumped 2.30 million b/d in August, according to the latest S&P Global Platts survey of OPEC production, down from 3.60 million b/d a year ago.

Iraq and Nigeria, two of OPEC's members which were over-producing well above their OPEC targets, joined Prince Abdulaziz at the same news conference table after a joint committee meeting, known as the JMMC, to pledge swift production cuts.

An Opec report noted that the cartel increased output by 136,000 barrels per day to more than 29.7 mbd, primarily due to increased production by Saudi Arabia.

"International trade relations have further deteriorated in the past few weeks but United States and Chinese officials announced that they would resume trade negotiations in early October", the Paris-based IEA said in its latest monthly report.

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